Tuesday, April 25, 2023

"Margarita Hard Seller" with no tequila isn't deceptive

Warren v. Coca-Cola Co., 2023 WL 3055196, No. 22-CV-6907 (CS) (S.D.N.Y. Apr. 21, 2023)

Defendant makes Topo Chico “Margarita Hard Seltzer.” It doesn’t have any tequila in it, though it is made with agave sugars. The front label contains the brand name “Topo Chico,” the word “Margarita,” and the phrase “Hard Seltzer.” These words appear on a yellow background containing faint images of agave plants. The label further indicates that the Product is 4.5% alcohol by volume.

defendant's package

Warren alleged that “[c]onsumers expect to receive a cocktail containing tequila when they order a margarita as this ingredient defines what a margarita is,” “[c]onsumers will expect the Product to contain tequila.” The use of “Hard Seltzer” allegedly reinforced that expectation, as “the term ‘hard’ in the context of alcohol refers to distilled spirits, i.e., ‘hard liquor’ ” like tequila. Nor does the product contain sparkling mineral water sourced in Monterrey, Mexico, which Plaintiff claims “is an essential part of Topo Chico beverages.”

She alleged NY GBL and other related claims. The court rejected them without leave to amend.

This is a question, at heart, of whether producers can push the definitions of products in new directions, not different in kind from whether “chik’n” can be made with all-vegan ingredients; consumers may need to learn new information, such as that alcoholic “margaritas” may not be made with tequila, if the definition is not frozen (no pun intended) by regulators.

Tequila: Plaintiff’s allegations were inconsistent with the label and with common sense. The product didn’t use the word “Margarita” in a vacuum, and instead states that the Product is a “Margarita Hard Seltzer.” “The context provided by the term ‘Hard Seltzer’ is critical and fatal to Plaintiff’s claim.” I didn’t know one couldn’t add tequila to seltzer!

The court: “Hard seltzer is a category of ‘alcoholic beverages that contain carbonated water, alcohol, and – in most cases fruit flavors, that have enjoyed skyrocketing popularity in the United States,’ which reasonable consumers would recognize as a product distinct from cocktails like margaritas.” How do we know? While plaintiff alleged that “hard” predominantly refers to distilled spirits, that’s only true for “hard liquor,” not for “hard cider” or “hard lemonade,” “and a reasonable consumer would understand the same in the phrase ‘hard seltzer.’” The reasonable meaning here is that, unlike regular seltzer, this one contains alcohol.

The court also took judicial notice that the product’s labeling as a “Margarita Hard Seltzer” contrasts sharply with the labels of the BuzzBox and Dulce Vida “[r]eady to drink ... margarita beverages” identified as competing alternatives in the complaint:

Those canned beverages are called “Perfect Margarita” and “Sparkling Margarita” with no additional qualifiers, and come in packages that describe the contents as “premium cocktails” and specify that they contain tequila. In contrast, the Product’s labeling does not refer to it as a cocktail or state that it contains tequila, nor does it describe the drink solely as any kind of Margarita – perfect, sparkling, or otherwise. Rather, the Product’s label uses “Margarita” as a modifier of the term “hard seltzer,” without any reference to cocktails or tequila.

Thus, “margarita” was a reference to taste, as confirmed by its proximity to flavor varieties on the package. Thus, “a reasonable consumer viewing the Product’s label as a whole would understand that they were purchasing a hard seltzer made to taste like a margarita and not a ready-to-drink margarita cocktail.”  

The use of agave images didn’t change anything, since the product uses an agave-based sweetener.

The court also pointed to the broader “circumstances” of purchase.

Had [Warren] lived in New York for any length of time, she would know that cocktails containing hard liquor are not and cannot be sold in grocery stores. But even assuming that she moved to New York right before buying the Product, she plainly was familiar with a margarita cocktail, and surely knew that nobody sells a margarita for $1.50. Further, cursory observation of the other items on sale in the beverage section of the ShopRite supermarket where she purchased the Product would have revealed soft drinks, beer, and hard ciders/lemonades/seltzers, but no hard liquor, cocktails, or wine.

[Would it be deceptive to sell these cans for $8 in a theater?]

Even if there was ambiguity created by the front (which the court thought there wasn’t) the ingredients label on the back, with its lack of reference to tequila, cured that ambiguity. I’m not sure why continued silence can cure ambiguity—the ingredient list doesn’t specify the type of alcohol—but the court thought that here, with “hard seltzer,” that continued silence confirmed the absence of tequila.

Likewise, Warren’s claim that the use of the Topo Chico brand name would lead reasonable consumers to believe that it contains sparkling mineral water sourced from Monterrey, Mexico was not plausible. The label made no claims that it was manufactured in Mexico or is otherwise connected to Mexico in any way, or that it contains sparkling mineral water of any kind; that was just Warren’s belief about the brand. “[A]ny such ambiguity is quickly resolved after reading the information on the Product’s back label, which explicitly states that it contains filtered carbonated water that is ‘not from source’ and certain ‘minerals for taste,’ and that it is produced and bottled in Milwaukee, Wisconsin.”

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